The Standing Committee’s Report follows a hearing on 29 June 2018, in which the Standing Committee scrutinised the ACCC’s conduct.

Extending the roles and responsibilities of the ACCC

The 2017-18 year was a big year for the ACCC and competition regulation in Australia –

The Government introduced significant, and long-anticipated changes to the Competition and Consumer Act 2010 (Cth) (CCA), as we described in our posts here and here;

The ACCC established a new financial services unit which enables it to play a ‘competition champion’ role in the financial services sector. The Government allocated the ACCC an additional $13.2 million over four years in the 2017-18 Budget to support this initiative;

The ACCC obtained record penalties for criminal cartel and secondary boycott proceedings under the CCA; and

The ACCC commenced and/or conducted a large number of inquiries and market studies, including multiple inquiries in the energy sector which span several years.

We discuss the main areas examined by the Standing Committee in the section below.

Current issues in competition and consumer law

Competition in the financial sector

In January 2018, the Productivity Commission reported that Australia’s financial system is ‘without a champion among the existing regulators’. Over the last year, the ACCC has proactively stepped into competition regulation in the financial services sector.

In particular:

the ACCC established a financial services unit to develop its financial expertise;

in May 2017, the ACCC commenced an inquiry into residential mortgage products which will continue until November 2018;

in May 2017 the ACCC commenced an inquiry into residential insurance products in Northern Australia which will continue until November 2020; and

in October 2018, the ACCC also commenced in inquiry into forex markets which will continue until May 2019.

The ACCC has ongoing support from the Standing Committee to perform the role of ‘competition champion’.

Energy markets

Energy markets remain a key area of interest for the ACCC. In June 2018, the ACCC published its final report in the Retail Electricity Pricing Inquiry (Electricity Report) in which it described the current situation with Australia’s electricity markets as “unacceptable and unsustainable”.

On 21 August 2018, following the release of the Electricity Report and examination of the ACCC by the Standing Committee, the Treasurer directed the ACCC to commence an inquiry into the prices, profits and margins in the National Energy Market.

As part of this inquiry, the ACCC is required to prepare a report on the industry at least every six months until 2025.

The ACCC is also conducting an inquiry into the supply of, and demand for, wholesale gas in Australia from 2017 to 2020. As part of this inquiry, the ACCC is required to prepare a report on the industry no less frequently than every six months. Since September 2017, the ACCC has published four reports.

The gas and electricity inquiries show an increased willingness by Government to mandate industry inquiries which span several years.

Consumer law penalties

The ACCC has signalled the importance of increasing penalties under the Australian Consumer Law (ACL) to align with the penalties available for breaches of the competition law provisions of the CCA. ACCC Chairman, Rod Sims, told the Standing Committee that:

“[w]hat we desperately need is penalties that send a message to the boards and top management that what they’ve done is serious… I think we need penalties of tens of millions of dollars. Sometimes we need penalties of well over $100 million to get people to sit up and take notice”.

The maximum penalties for a corporation breaching certain provisions of the consumer law are now – per breach:

the greater of $10 000 000

three times the value of the benefit received, or

10% of annual turnover in the preceding 12 months.

Competition law enforcement

The ACCC has also focused on deterring misconduct and breaches of the CCA through higher penalties and by pursuing criminal proceedings. For example:

in May 2018 the ACCC successfully appealed the penalties imposed on Yazaki for engaging in cartel conduct. This led to the Full Federal Court ordering Yazaki to pay increased penalties of $46 million, the highest penalty handed down under the CCA.

in February 2018, the ACCC obtained a penalty of $1 million against the Construction, Forestry, Mining and Energy Union for engaging in secondary boycott conduct against Boral and Alsafe. This is the highest penalty ever awarded for a breach of the secondary boycott provisions.